Yesterday, the United States Supreme Court issued its highly anticipated decision in Kiobel v. Royal Dutch Petroleum Co.1 Chief Justice Roberts, writing for the majority, held that the presumption against extraterritoriality applies to claims under the Alien Tort Statute (“ATS”),2 and that, because the plaintiffs were “seeking relief for violations of the law of nations occurring outside the United States,” their claims were barred. The Court’s decision continues a recent trend by federal courts of invoking the presumption against the extraterritorial application of U.S. laws. The decision will severely limit the ability of foreign plaintiffs to use the United States courts to sue multinational corporations for alleged wrongs, where the underlying activity occurred abroad.

BACKGROUND OF THE CASE

Kiobel was originally filed as a purported class action by a group of Nigerian nationals, now residing in the United States, against Dutch, British, and Nigerian corporations, including Shell Petroleum Development Company of Nigeria, Ltd. (“SPDC”). SPDC had been involved in oil exploration and production in the Niger delta, and residents of an area called Ogoniland began protesting the environmental impact of SPDC’s activities.3 The plaintiffs alleged that the corporations aided and abetted the Nigerian Government in violent suppression of protests, and that, specifically, the defendants violated the law of nations by aiding and abetting the Nigerian Government in committing (1) extrajudicial killings; (2) crimes against humanity; (3) torture and cruel treatment; (4) arbitrary arrest and detention; (5) violations of the rights to life, liberty, security, and association; (6) forced exile; and (7) property destruction.4

The District Court dismissed the plaintiffs’ claims for aiding and abetting extrajudicial killings, violations of the rights to life, liberty, security, and association, forced exile, and property destruction on the grounds that the law of nations did not provide sufficiently specific definitions for these crimes.5 The District Court declined to dismiss the remaining claims, however, and certified its order for interlocutory appeal to the U.S. Court of Appeals for the Second Circuit. On appeal, the Second Circuit dismissed the entire complaint, holding that ATS jurisdiction extends only to civil actions against individuals, and not to actions against corporations.6

The Supreme Court granted certiorari to consider the question of whether corporations can ever be held liable under the ATS.7 After oral argument, the Court directed the parties to provide supplemental briefing on a question that was not originally before it: whether and under what circumstances an ATS claim can reach conduct occurring outside the United States.8 The Supreme Court decided the case on this second question, without addressing the original question.

THE COURT’S OPINION

The Supreme Court’s affirmation of the dismissal of the plaintiffs’ suit was unanimous, but the justices were divided as to their reasoning. Chief Justice Roberts, writing for the majority, held that because all the relevant conduct took place outside the United States, the claims were barred. The Court rested its decision on the presumption against extraterritorial application that is a principle of statutory interpretation.9 That presumption, as Chief Justice Roberts explained, is that “[w]hen a statute gives no clear indication of an extraterritorial application, it has none.”10 The Court further explained that this presumption guards against “unwarranted judicial interference in the conduct of foreign policy,” a concern that is “magnified in the context of the ATS.”11 The Court concluded that “[t]he principles underlying the presumption against extraterritoriality thus constrain courts exercising their power under the ATS.”12

The Court held that nothing in the text of the ATS reflected a clear Congressional intent that the statute should apply outside the United States.13 Notably, the fact that the ATS covers actions by aliens for violations of international law was not enough to imply extraterritorial reach. In this regard, Chief Justice Roberts pointed out that “such violations affecting aliens can occur either within or outside the United States.”14 Thus, the Court concluded that the text of the ATS did not contain a clear indication of extraterritorial application.

The Court also found nothing to suggest that the ATS “was passed to make the United States a uniquely hospitable forum for the enforcement of international norms.”15 To the contrary, the Court said, when Congress enacted the ATS in 1789, the “fledgling Republic” would have been extremely reluctant to assert itself in the affairs of other nations by providing a cause of action “for conduct occurring in the territory of another sovereign.”16

Concluding that the presumption against extraterritoriality applies to claims under the ATS, and that nothing in the ATS serves to rebut that presumption, the Supreme Court ruled that the plaintiffs’ claims were barred because all the challenged conduct took place outside the United States. Claims under the ATS must “touch and concern the territory of the United States . . . with sufficient force to displace the presumption against extraterritorial application.”17 Although the Court did not define the conduct that would meet this standard, it did say, in a significant aspect of the ruling that will undercut a theory that the ATS plaintiffs’ bar would likely have otherwise tried to pursue, that “mere corporate presence” in the United States would not suffice.18

Justice Breyer, writing for four concurring Justices, agreed with the Court’s conclusion that the claims were barred. The concurring Justices would have applied jurisdictional principles, however, rather than the presumption against extraterritoriality. Under Justice Breyer’s approach, the ATS would provide jurisdiction where “(1) the alleged tort occurs on American soil, (2) the defendant is an American national, or (3) the defendant’s conduct substantially and adversely affects an important American national interest.”19 In the opinion of the concurring Justices, none of those circumstances was present in Kiobel.

CONCLUSION

The Supreme Court could have, but did not, eviscerate the use of the ATS as a basis for corporate lawsuits had it concluded that the statute applies only to suits against individuals, not against corporations. Although the Court did not go that far, Kiobel is a landmark decision that should effectively quash lawsuits brought by foreign plaintiffs where the asserted jurisdictional basis is the ATS and all, or practically all, of the relevant conduct took place outside of the United States.